Motor Month

By Verdict Staff May 1, 2008

The new car market fell for a sixth successive month in October. The decline was the steepest recorded so far in 2008 and was more like to the falls reported in 1991. Registrations over the past three months have fallen by 21.4 per cent, and figures are down by 184,541 units over the first ten months of the year. The SMMT has revised the full year 2008 forecast of the new car market down to 2.15m units, a 10.7 per cent year-on-year decline.

The market is forecast to fall to 1.92m units in 2009. The overall weakness in the market is most prominently felt in the private and business sectors, but fleet demand has also come unstuck in recent months. The mini segment was the only sector to post growth in October, although supermini volumes continue to attract a larger share of the market. “October has proved another difficult month for the UK motor industry and action is needed to help restore consumer confidence and encourage buyers back to the showrooms,” said Paul Everitt, SMMT chief executive.

There will be significantly fewer car retailers operating in the UK in the years to come, as a result of vehicle manufacturers tightening control over dealership standards, according to analysts PricewaterhouseCoopers. Chris Kent, a director in the automotive team at PricewaterhouseCoopers, said that many more dealers are expected to follow those that have already closed their doors this year. “Manufacturers have introduced ever-stricter standards for those who hold franchise agreements, in an effort to exercise closer control over their brand’s corporate identity,” said Kent. “Such restrictions will cause some dealers to resign the franchise while others will be forced out, leading to a smaller pool of businesses representing each marque. Competition for sales will remain fierce, however, with a broader range of car brands chasing what may well be a dwindling number of prospective buyers.”

Inchcape is to cut jobs across the UK due to falling sales. The firm, which employs about 6,000 people in the UK, said it was unable to say how many positions would go as part of its plans to reduce costs by £50m. UK like-for-like sales fell 11 per cent in the three months to 30 September, against a year earlier, and Inchcape warned that profits would be lower than expected. The company runs dealerships for a number of carmakers, including Audi, Mercedes-Benz, Toyota and Mazda. Inchcape said that as a result of the falling sales, its profits would now be less than previous market estimates this year, while 2009’s would be “significantly lower”.

Over a third of used car buyers are looking to counteract rising motoring charges and challenging economic conditions by downsizing to a smaller, more cost-effective car. In a survey carried out this month on http://www.glass.co.uk/, 38 per cent of buyers cited fuel prices and rises in road tax for heavier-polluting vehicles as factors motivating them to swap their car for a more compact and efficient model The poll also revealed that a growing number of motorists are switching to diesel as a way of cutting running costs. Of those surveyed, 29 per cent stated an intention to exchange their petrol vehicle for a diesel model, expecting to take advantage of significant reductions in CO2 emissions and fuel consumption.